Friday, October 5, 2012

NGO PBJ

I caught a bit of a piece on NPR about a project in Haiti to combat malnutrition. There's a process for making enriched peanut butter that provides high-quality protein (this means that the protein contains all the essential amino acids, a rarity in plants) and enough lipids and glucose for basic nutrition.

So a charity organization called Meds and Food for Kids (MFK) builds a processing plant in a little town on the North Coast of Haiti, Cap-Haitien. Another charitable organization, Partners in Health (PiH) also builds a factory, this one bigger and up in the highlands where the peanut farms are. Both of these ventures are quasi-private, supported by charitable donations. Both NGOs insist on buying local peanuts, despite higher prices, using similar reasoning underpinning most locavore movements (keeping the money in the community or something).

Most economists would agree that this is inefficient, but opinions might be split on whether or not the inefficiency is tolerable. The Duflo argument that poverty and malnutrition retards growth opportunity is compelling and Haiti is well-known as a development basket case. Foreign businesses in Haiti have a storied history of being charged with exploitation, so this is an interesting test case for euvoluntary intuitions.

Since MFK and PiH are quasi-charitable orgs, how do you imagine wealthy westerners would react if Rosefield Packing Co Ltd would open a for-profit venture on the island? Suppose that this firm, which has been making peanut butter since 1933, produces the peanut paste at lower cost, using its international supply chain. Would it be euvoluntary or would folks cry exploitation once again? In equilibrium, what would the BATNA be? Bear in mind that MFK is already complaining that the PiH plant is threatening their operation. How would Skippy change the moral landscape?